Declaration of personal interest is key area that requires careful attention within organisations. Indeed, the general declaration of personal financial interests’ provision stipulated in s75(4) of the Companies Act 71 of 2008, as amended (“the Companies Act”), reads:
“At any time, a director may disclose any personal financial interest in advance, by delivering to the board, or shareholders in the case of a company contemplated in subsection (3), a notice in writing setting out the nature and extent of that interest, to be used generally for the purposes of this section until changed or withdrawn by further written notice from that director.”
Similarly, Part 5.3, Principle 7, Practice 25 of the King IV Report on Corporate Governance™ for South Africa 2016 (“King IV™”) recommends that:
“Subject to legal provisions, each member of the governing body should submit to the governing body a declaration of all financial, economic and other interests held by the member and related parties at least annually or whenever there are significant changes.”
The recommendation to make a general disclosure of relevant interests as alluded to above is in addition to the recommendation for a specific declaration to be made at the beginning of each meeting of the governing body or its committees of any conflict of interest that a member of the governing body may have in respect of a matter on the agenda.
Conflicts of interest may arise where an individual’s personal or family interests and/or loyalties conflict with those of the organisation. As a general rule, no conflict between the personal interests of members of a governing body and the interests of the organisation which they serve should be allowed.
Where a potential conflict of interest cannot be avoided, it has to be managed in such a manner as to ensure that the interests of the organisation are at all times protected. It is for this reason that the law in certain instances as well as best practice recommendations call for disclosure of interest in any matter on the agenda of the governing body or any of its committees.
However, considering that a matter may not necessarily find its way onto the agenda of the governing body and/or its committees, it is recommended that each member of a governing body submits a general declaration of interests that could assist the organisation in identifying potential conflicts between its interests and that of the members of its governing body or parties related to such members.
It is worthwhile to also note that correctly managing a conflict of interest could be of value and assistance to a member of the governing body wishing to rely on the business judgement rule as part of his defense in the event of legal action being taken against him in his capacity as a member of the governing body.
Declarations assists clients with the Conflict of Interest management process within their organisations by enabling their staff to make general declarations. Depending on the client configuration, employees are able to declare any of the following using the web browser on the device of their choice:
Central Risk Management are able to configure the system to their organisation’s policies and procedures. In this way, client organisations have the freedom to decide what must be tracked and then configure the routing and approval rules for each action. They can also:
Key persons within the client organisation (Line Managers and Risk Cluster Managers) are also able to receive alerts and requests for approval based on the specific configuration.
The topics in this section help users in the use of the Declarations webapp on readyplatform
The Administrator Guide contains all the guidance needed for webapp administrators and sponsor to set up and manage the webapp.
Click here to download it.
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